Tag Archives: donor-advised funds

Charity, Incorporated

It seems that every time I set out to write about topics other than donor-advised funds, fresh news explodes on the scene that requires my attention, and yours. This week it’s the astounding – but not at all surprising – announcement by the Chronicle of Philanthropy that six of the ten top fundraising organizations in the nonprofit world in 2016 were donor-advised fund sponsors.

Five of those organizations – Fidelity Charitable (#1 on the list for the second year in a row), Schwab (#6), National Christian Foundation (#8), Silicon Valley Community Foundation (#9), and Vanguard Charitable (#10) were among the eleven top fundraisers the year before. The newcomer at the top of the charts, bursting onto the scene at number three, with a jaw-dropping one-year increase in donations of 450%, was the Goldman Sachs Philanthropy Fund, which brought in over $3.1 billion.

That Goldman Sachs, the corporate embodiment of Wall Street avarice and power, should appear on the list of top charitable fundraisers is not surprising to those of us following this story: there’s money to be made in donor-advised funds, and if the folks at Goldman Sachs know one thing, it’s how to turn a profit. It’s only surprising that it took them this long. Continue reading

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A Tale of Two Letters, and Two Sectors

[Note: A version of this post was published in the opinion pages of The Chronicle of Philanthropy on November 2, 2017.]

Here’s an idea: Let’s agree to stop referring to “the nonprofit sector.”

That’s because, in reality, there are two nonprofit sectors.

The first is comprised of the hundreds of thousands of charitable organizations that provide actual services. The second is made up of funders: foundations, donor-advised fund sponsors, and corporate and individual donors.

The priorities of these two nonprofit sectors are different. The first nonprofit sector – I’ll call them “the charities” for short – is focused on meeting mission: feeding, housing, educating, and counseling people; saving the earth and animals; curing diseases and healing the sick; producing community theater and running art classes; rescuing, feeding, and supporting families displaced from natural disaster; and generally doing what they can to keep this frayed and fragmented society of ours from falling to pieces.

The second nonprofit sector – “the funders” – genuinely cares about all of that. But the funders are also concerned with their own institutions’ and donors’ well-being, tax advantages, budgets, and privileges. And the interests of the funders are often in conflict with those of the charities. Continue reading

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Strange Math

[A version of this piece appeared in the Chronicle of Philanthropy on July 13, 2017.]

Here’s the world’s simplest math problem.

My wife Pat and I often meet a pair of friends for a movie. If there’s a risk that the show will sell out, I run over to the theater ahead of time and buy all four tickets in advance. When our friends arrive, we hand them their tickets and they pay us back what they owe us.

So the question is this: how many tickets did the movie theater sell?

Four, of course.

But in the parallel universe of donor-advised funds (DAFs), where double-counting comes as naturally as breathing and dissembling, the answer would be six.

Let me try to explain the inexplicable. Continue reading

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Wall Street 9, Charity 0

The news last week was stunning, but at the same time utterly unsurprising: When The Chronicle of Philanthropy compiled its annual Philanthropy 400 list of the nonprofit organizations that had raised the most money in the United States last year, the top dog was not United Way or the Salvation Army, but Fidelity Charitable.

The finding sparked a series of stories around the country: The New Yorker,  The Washington Post , The San Francisco Chronicle, The American Prospect, and National Public Radio, to name a few. Journalists are gob-smacked by the idea that an affiliate of a financial services firm could claim the title of top charity – and that it did so by the hefty margin of $900 million over United Way Worldwide. (Last year Fidelity’s take rose 20%; United Way’s dropped 4%.)

But those of you who have been reading my rants about the commercial donor-advised fund industry have seen this coming for five years. It’s like watching the sea levels rise from climate change. We’ve long known what was going to happen. Now, the evidence is incontrovertible. I take some grim satisfaction in the news, but mostly I feel despair. Continue reading

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